Board Structure in Swedish Mutual Funds Industry
Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Mutual funds attracted great attention of both shareholders and academics in last few decades. Mutual funds provide benefits like diversification, professional managements and reduced costs for individual shareholders. Shareholders invest their assets into mutual funds managed by professionals. Managers may have an incentive to use those assets to satisfy their own interests. They can achieve this by charging excessive fees or spending more on the perquisites. These unmatched interests of shareholders and managers create so called principal-agent conflicts. Some researchers argue that market competition in mutual funds industry is strong enough to align interests of both shareholders and managers, thus mitigating principal-agent conflicts. Others believe there is need for internal governance to monitor managers‟ behaviors. Board of directors as an internal governance mechanism is responsible for aligning shareholders and managers interests.We collected data on board characteristics to find if they are related to funds attributes. Our sample of funds consists of 68 fund management companies with total of 603 mutual funds managed by those companies. Board characteristics include board size, age and gender of board members, and presence of CEO on the board. Fund attributes are total expense ratio, rate of return and management fees used as a measure of board effectiveness. We analyzed relationship of board characteristics and fund attributes separately on the company level and fund level.On the company level we found no relationship between board size and board age with expense ratio and rate of returns. We found significant positive relationship between board gender and presence of CEO with expense ratio. These results indicate that with the increase of male members on the board and the presence of CEO on the board there is an increase in total expense ratio. On the fund level analysis we found different relations with various types of funds. This may indicate that depending on the type of the fund the structure of the board that is effective changes.
Place, publisher, year, edition, pages
2011. , 76 p.
principal-agent conflicts, mutual funds, board structure
IdentifiersURN: urn:nbn:se:umu:diva-45164OAI: oai:DiVA.org:umu-45164DiVA: diva2:426510
2011-05-31, Umea, 13:00 (English)
UppsokSocial and Behavioural Science, Law
Nylén, Ulrica, Studierektor